Outlook for oil remains positive as lockdown restrictions ease; expert says

Crude Oil Outlook: The outlook for crude oil remains positive in the near term as lock down restriction ease across the world, Senior Technical Analyst Anuj Gupta said. He added that inventory situation is improving as the demand for petrol and diesel rise.

Gupta who is a Deputy Vice President, Commodity and Currency Research at Angel Broking said that he expects the WTI crude oil to reach USD 42 by Friday while the Brent Crude at around USD 46.

Today, the WTI crude was trading around USD 39.89 on Nymex, up by over 1 per cent at the time of filing of the story.

The Brent Crude was trading around USD 41.80, also up by over 1 per cent.

Meanwhile the Crude Oil July futures on MCX were trading around Rs 3010, down by almost 0.2 per cent. He expects the oil futures to trade between Rs 3200 and Rs 3300 by end of Friday.  

He said that prices are likely to firm up with ongoing production cuts by OPEC and the US. He expects a further cut in oil production. The low production is also on account of several oil rigs getting closed after the coronavirus lockdown caused massive losses to the oil companies, Gupta said.

Tens of millions of barrels of crude and oil products stored on tankers at sea due to the coronavirus crisis are being sold, in a sign fuel demand is recovering as lockdowns ease, shipping sources say, Reuters today reported. Crude held on tankers fell below 150 million barrels by the end of June, down from more than 180 million barrels in late April, the report said quoting IHS Markit estimates.

The demand for fuel has dropped by as much 30 per cent between March and May creating storage problems for the oil companies.

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While the cases in the US have seen an uptick, raising speculations of another lockdown, Gupta opines that another full blown lockdown is not likely to happen. Economies have realised that a lockdown has not benefited much and has only aggravated the economic situation. He, however, said that there may be some restriction, but the economy will remain open.